The pandemic of Covid-19 has left more than 30 million people unemployed in Latin America and the Caribbean, Another 23 million have left the workforce this year due to lack of opportunities and the unemployment rate has increased by 2.5 percentage points, from 8.1% to 10.6%, according to the report ‘ Labor Panorama 2020 ‘carried out by the International Labor Organization (ILO).
The consequences of the pandemic on the Latin American labor market are unprecedented in the region, which in the last 10 months has declined to at least 10 years in terms of employment. What’s worse is that the crisis is far from over, according to ILO Regional Director Vinícius Pinheiro.
“We came to 2021 with employment in intensive care,” Pinheiro said on Thursday during a press conference, in which he postulated that “this is the biggest crisis that this report has recorded,” which began in published in 1994. in fact, unemployment forecasts for the region next year point to a rate of 11.2%, taking into account factors such as moderate GDP growth (3.5%), an insufficient figure to recover all that was lost during the crisis. In addition, there is uncertainty about the evolution of the pandemic.
With this scenario, regional governments will face the challenge of “laying the foundations for a new and better normalcy”, which will involve adopting strategies to generate more and better jobs as production is reactivated and is decreasing the health emergency.
“It is now essential to achieve economic growth with employment. Employment is crucial to reducing poverty and tackling the widening inequalities that this pandemic is leaving behind, “the ILO regional director added.
However, the ILO analysis warns that not only high unemployment is the only problem in the Latin American labor market. In 2020, there was an unprecedented transition to inactivity by people who gave up looking for work due to lack of opportunities. Thus, the labor participation rate fell to 5.4 percentage points, to 57.2%, according to data available at the end of the third quarter of 2020.
To the extent that economies recover, the return of these people to labor markets will generate additional pressures for next year’s unemployment indicators.
WOMEN AND YOUNG PEOPLE, THE MOST AFFECTED
The report highlights that before the health crisis, what sustained regional participation and employment was the incorporation of women into the labor market.
However, the pandemic has seen a setback in this process, so that the reduction in labor participation was greater among women (-10.4%) than among men (-7.4%). “The health crisis in 2020 has had an even more significant impact on women’s performance indicators,” the document reads.
In the case of the population aged between 15 and 24, during the first three quarters of 2020 youth participation and employment rates fell by around 5.5 percentage points, to 42.7% and 33%. The youth unemployment rate rose 2.7 percentage points, to 23.2%, a level that had not been recorded before, and which implies that one in four young people was unemployed in the third quarter of 2020.
By sectors, the contraction in employment was particularly severe in service sectors such as hotels (-17.6%) and trade (-12.0%). On the other hand, it is also observed that the health crisis strongly affected employment in construction (-13.6%) and industry (-8.9%). The smallest fall in employment was observed in agriculture (-2.7%).
Pinheiro has assured that there is no dilemma between preserving health and the economy, as without health, there is no production or consumption. Therefore, he stressed that in the future it will be important to consider the lessons learned during the epidemic, emphasizing that safety and health at work will be a key issue for economic recovery. The director also highlighted the importance of social dialogue between governments, companies and workers, which is “more relevant than ever.”
EVOLUTION OF WAGES
Wages at the regional level experienced very different variations during the year depending on the country, so that in Brazil (+ 7.2%) and Costa Rica (+ 2.4%) there were wage increases, while in Colombia they contracted. (-2.4%).
However, the ILO’s analysis indicates that wage increases in some countries were affected by the particular environment of the pandemic, so that lower-income wage earners were most affected by the loss of jobs. jobs, which reduced the relative importance of lower wages in the region.
With regard to the minimum wage, most countries recorded wage increases in January as part of their daily annual adjustments, except for Nicaragua, which made wage adjustments during the first quarter, and Chile, which made adjustment in the minimum wage twice, once during the first quarter and once in September.
EXISTING STRUCTURAL PROBLEMS
“The region was hit hard by this crisis, even more than others in the world, and this was largely due to structural problems that existed and we knew,” said Pinheiro, who stressed that some of these structural problems are the persistent lack of fiscal space, the gaps in coverage in social protection, the high social inequality and the high informality, which have highlighted the precariousness of large sectors of society.
With regard to informality, the regional director pointed out that in this crisis it will not be a protection mechanism as in previous ones, since during the pandemic labor informality contracted, so that the stabilizing role of this is not it has been proved .
For its part, the report noted that despite a major effort by several Latin American governments during the crisis, in some cases “there was a feeling that aid was arriving late, or that it was not enough to cover the lost revenue.”
The recipe for job recovery goes through several factors according to the ILO. Among them is the need to rethink the model of economic insertion, the implementation of technological development combined with environmental sustainability, the promotion of business entrepreneurship, the formalization of employment and employment policies that respond to new realities.
“The road to a new and better normalcy will not be easy, nor will it be short,” said Pinheiro, who added that “this is the legacy of 2020, the year we lived with the Covid-19.”